In May 2020, the People’s Bank of China (“PSoB“), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange jointly issued an opinion regarding financial support for the Guangdong-Hong Kong-Macao Greater Bay Area (the “Opinion”). According to item no.28 of the Opinion, one of the means of strengthening financial supervisory co-operation is to explore the setting-up of a cross-border fintech supervisory sandbox.
Following from this opinion, the Hong Kong Monetary Authority (“HKMA”) and the PSoB jointly announced that they have signed the “Memorandum of Understanding on Fintech Innovation Supervisory Cooperation in the Guangdong-Hong Kong-Macao Greater Bay Area” (the “MOU”) on 21 October 2021. Under this MOU, the two authorities have agreed to link up PBOC’s Fintech Innovation Regulatory Facility with the HKMA’s Fintech Supervisory Sandbox (“FSS”) in the form of a “network”.
The FSS was launched by the HKMA in September 2016. Its aim is to facilitate the pilot trials of fintech and other technology initiatives of authorised institutions (i.e., banks) and their partnering technology firms before they are launched on a fuller scale. The FSS was implemented to provide a flexible yet supervisory arrangement for authorised institutions to conduct timelier live tests of their initiatives before their formal launch. This enables authorised institutions to gather real-life data and user feedback on their fintech products/services easily in a controlled environment, so that they can make refinements to their new initiatives, thereby expediting the launch of new products at a reduced development cost.
This new network link-up will provide a one-stop platform to allow financial institutions and technology firms to conduct pilot trials of cross-boundary fintech initiatives concurrently in Hong Kong and Greater Bay Area cities. It is hoped that this arrangement will facilitate innovation and strengthen fintech supervisory exchanges between the regions.
To find out more the abovementioned topic, please feel free to contact us today for a discussion. To learn more about another initiative between the HKMA and PSoB, please visit our previous post here.